The appearance of banknotes that are only partially covered has reduced both types of friction. They were easier to handle and saved work and resources from making precious metal coins. September 2018 Calendar Marathi, people started using cash, not checks, credit cards, or digital transactions because they make payments even smoother. Given this story, Krugman catches the enthusiasm of the cryptocurrency scene, “because cryptocurrencies go exactly in the opposite direction of the trend. Instead of almost smooth transactions, we have a high cost of doing business, because transferring bitcoin or other cryptocurrencies requires the complete history of past transactions.
September 2018 Calendar Marathi
Instead of creating money with a click of the mouse, we have money to be saved through resource-intensive computer calculations. “It’s like celebrating it,” using state-of-the-art technology to throw the money back 300 years. ” Bitcoin is not covered by anything The conventional money, Krugman says, is doing a pretty good job. The transaction costs are low, the purchasing power is predictable.
Cryptocurrencies have therefore not really established themselves in the trade even after nine years. This does not mean that they are a bubble. Because similar things can be said about gold and cash. The big bills, for example, play virtually no role in consumption, but are mainly used for criminal activities such as drug trafficking and tax avoidance. Cryptocurrencies compete, says Krugman, for this type of business.
“Hardly anyone uses Bitcoin to pay their bills, but some people use it to buy drugs, manipulate elections, and so on.” This kind of need could add value to Bitcoin. However, cryptocurrencies have one drawback compared to the good old ones: their value is nowhere anchored. Dollars are ultimately backed by the US government accepting them for tax debts, gold by making jewelery and other things out of them.
“Cryptocurrencies, on the other hand, have no anchors in reality. Their value depends entirely on self-fulfilling prophecies – which means that it is a real possibility that they completely coincide. If speculators have a collective moment of doubt, a sudden fear that bitcoins will be worthless, then, well, bitcoins would be worthless. “That this happens, Krugman says, more likely than that it does not happen.
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“Once the dream of a blockchain future dies, the disappointment will cause the whole thing to collapse.”Krugman admits he might be wrong. Therefore, at the end of his commentary, he asks the readers to answer one single question: What problem do cryptocurrencies really solve? High production costs are not a mistake, but egg n Advantage: Well, what should one say about that?
I have some comments on Krugman’s arguments: First, I find it negligent to lump the manufacturing and transaction costs of money together. These are different categories. When the ECB prints financial notes, it consciously applies procedures that make it difficult to produce. While transaction costs are a hindrance to the economy as a whole, manufacturing costs have a benefit – namely to prevent money being arbitrarily manufactured and thus devalued.
This may give us an initial answer to Krugman’s question: cryptocurrencies reduce transaction costs but increase manufacturing costs. They can be transferred as smoothly as banks’ digital money, but can not be generated at the click of a mouse. Krugman flunkers a bit when he thinks the value of the dollar is predictable. Maybe the dollar will remain stable for a year, maybe five.
But when we talk about periods of ten to fifty years, there is no Fiat September 2018 Calendar Marathi that has received its value. Bitcoin has all the advantages of having paper or byte money without the disadvantage of being arbitrarily generated. Bitcoin is the only fast and cheap form of payment that is protected against inflation and hyperinflation.